The Quality Effect: Does Financial Liberalization Improve the Allocation of Capital?
By Abdul Abiad, N. Oomes, Kenichi Ueda. Social Science Research Network, 2004
229 citations recorded by the source corpus.
The study documents evidence of a quality effect of financial liberalization on allocative efficiency, which is measured by the dispersion in Tobin's Q across firms. Based on a simple model, the authors predict that financial liberalization, by equalizing access to credit, reduces the variation in expected marginal returns. They test this prediction using a new financial liberalization index and firm-level data for five emerging markets: India, Jordan, Korea, Malaysia, and Thailand. They find strong evidence that financial liberalization, rather than financial deepening, improves allocative efficiency.
Subfields: General Health Professions, Organizational Behavior and Human Resource Management
View Paper: https://www.semanticscholar.org/paper/b18c8ebffc397322ae3425a79ae3101a38f805a6
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In General Health Professions
In Organizational Behavior and Human Resource Management
Citations in the corpus
- Growth and Structural Reforms: A New Assessment (2009, methodology): “In our main regressions, we use a subcomponent from Abiad et al. (2008) which covers restrictions on financial credits and personal capital transactions of residents and financial credits to nonresidents, as well as the use of multiple exchange rates.”
- Financial reforms and income inequality (2012, unknown): “3 reducing variation in expected marginal returns (Abiad et al., 2008).”
- Finance and Income Inequality: A Review and New Evidence (2017, unknown): “Second, financial reforms may lead to more equal access to credit thereby improving the efficiency of the domestic financial system (Abiad et al., 2008).”